New Delhi: About two of every three liquefied petroleum gas (LPG) cylinders used in Indian homes for cooking come from West Asia, making households the first, and politically most sensitive, casualty if regional tensions disrupt supply lines, said industry executives.
The American strikes on Iran’s nuclear sites have heightened concerns about supplies from the world’s most prolific oil-producing region getting choked. In planning for such scenarios, Indian policymakers and industry leaders have recognised that not all fuels carry the same risk, with LPG standing out as the most vulnerable if tensions in West Asia boil over.
Over the past decade, LPG usage in India has more than doubled, reaching 330 million households, thanks largely to a government push to expand its adoption. This has increased the country’s import dependence, with roughly 66% of its LPG sourced from overseas, and about 95% of that coming from West Asia, primarily Saudi Arabia, the UAE and Qatar.
India has LPG storage capacity across import terminals, refineries and bottling plants sufficient to cover only about 16 days of national average consumption, according to petroleum and natural gas ministry data.
No Panic Buying from Refiners
However, the country is far better positioned with respect to petrol and diesel. As a net exporter of both, India ships out about 40% of its domestic petrol usage and about 30% of its diesel usage, making it simpler to redirect export volumes to the domestic market if needed.
While LPG can be sourced from alternatives such as the US, Europe, Malaysia and parts of Africa, shipments from these suppliers would take longer to arrive.
Meanwhile, piped natural gas (PNG) is available to just 15 million households in India, making it an impractical substitute for the nation’s 330 million LPG connections. After the phase-out of kerosene supply from the public distribution system in most places, electric cooking remains the only viable fallback in the event of an LPG shortage in cities.
For crude oil, inventories at refineries, pipelines, ships and the national Strategic Petroleum Reserve (SPR) can sustain refinery operations for about 25 days. Refiners have refrained from panic buying amid the Israel-Iran conflict, confident that supplies are unlikely to be choked.
Staying vigilant
“Even if we place orders now, deliveries wouldn’t arrive until next month or later,” said an executive, who did not wish to be identified. “Moreover, our spare capacity to store additional barrels is limited. It doesn’t make sense to tie up working capital when the risk of disruption is low. What really matters is staying vigilant and ensuring domestic consumers are protected.”
Executives also expect any crude price surge to be short-lived, as global market dynamics remain tilted towards softer pricing. “The oil market has learned to live with geopolitical shocks. Prices rise sharply after events like the invasion of Ukraine or the Gaza conflict, but eventually settle down as economic realities take hold,” another executive said.
Higher oil prices may erode refiners’ margins in the short term, but retail prices of petrol and diesel are unlikely to move, executives said. State-run oil marketing companies have kept pump prices unchanged for about three years and are expected to continue doing so despite fluctuations in global markets.
The American strikes on Iran’s nuclear sites have heightened concerns about supplies from the world’s most prolific oil-producing region getting choked. In planning for such scenarios, Indian policymakers and industry leaders have recognised that not all fuels carry the same risk, with LPG standing out as the most vulnerable if tensions in West Asia boil over.
Over the past decade, LPG usage in India has more than doubled, reaching 330 million households, thanks largely to a government push to expand its adoption. This has increased the country’s import dependence, with roughly 66% of its LPG sourced from overseas, and about 95% of that coming from West Asia, primarily Saudi Arabia, the UAE and Qatar.
India has LPG storage capacity across import terminals, refineries and bottling plants sufficient to cover only about 16 days of national average consumption, according to petroleum and natural gas ministry data.
No Panic Buying from Refiners
However, the country is far better positioned with respect to petrol and diesel. As a net exporter of both, India ships out about 40% of its domestic petrol usage and about 30% of its diesel usage, making it simpler to redirect export volumes to the domestic market if needed.
While LPG can be sourced from alternatives such as the US, Europe, Malaysia and parts of Africa, shipments from these suppliers would take longer to arrive.
Meanwhile, piped natural gas (PNG) is available to just 15 million households in India, making it an impractical substitute for the nation’s 330 million LPG connections. After the phase-out of kerosene supply from the public distribution system in most places, electric cooking remains the only viable fallback in the event of an LPG shortage in cities.
For crude oil, inventories at refineries, pipelines, ships and the national Strategic Petroleum Reserve (SPR) can sustain refinery operations for about 25 days. Refiners have refrained from panic buying amid the Israel-Iran conflict, confident that supplies are unlikely to be choked.
Staying vigilant
“Even if we place orders now, deliveries wouldn’t arrive until next month or later,” said an executive, who did not wish to be identified. “Moreover, our spare capacity to store additional barrels is limited. It doesn’t make sense to tie up working capital when the risk of disruption is low. What really matters is staying vigilant and ensuring domestic consumers are protected.”
Executives also expect any crude price surge to be short-lived, as global market dynamics remain tilted towards softer pricing. “The oil market has learned to live with geopolitical shocks. Prices rise sharply after events like the invasion of Ukraine or the Gaza conflict, but eventually settle down as economic realities take hold,” another executive said.
Higher oil prices may erode refiners’ margins in the short term, but retail prices of petrol and diesel are unlikely to move, executives said. State-run oil marketing companies have kept pump prices unchanged for about three years and are expected to continue doing so despite fluctuations in global markets.
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